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Monday, 28 February 2011
Page: 576


Senator CORMANN (10:16 AM) —Today we are debating yet another tax from a high-taxing, high-spending, wasteful Labor government. We are debating an increase in income tax rates for all Australians earning more than $50,000 a year unless they qualify for the specific exemption. So why do we have to debate this tax in the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011? We have to debate this tax because, after three years of Labor waste and mismanagement, our public finances are in such bad shape that, faced with an unexpected disaster, the government feels it has no choice but to whack on another tax. Let us be absolutely clear: if it had not been for the Prime Minister’s waste and mismanagement as Minister for Education with her school halls program, if it had not been for the waste and mismanagement with the pink batts program and with one program after another being maladministered by this Labor administration, there would be no need for this latest income tax hike.

This is the latest in a long list of new Labor taxes. Currently we are debating the flood tax, the mining tax, the carbon tax and student taxes—which of course come after the alcopops tax, the luxury car tax increase and the tax on the North-West shelf gas projects—a whole plethora of new and increased taxes introduced over the last three years of this Labor government. In fact, over the last three years more than $40 billion in new or increased taxes have been introduced by this government. This government has so lost touch with the Australian people that it does not even know a tax when it falls over one. The Prime Minister, the Treasurer and the Minister for Finance and Deregulation again and again went out there in radio land, in 7.30 Report land or on the news and Meet the Press and so on and claimed $40 billion worth of new and increased taxes as what? As savings.

This government thinks that when it whacks another tax onto the Australian people it is actually saving money. No doubt this is because this government thinks that all the money is the money of the government and that the government through its largess makes a decision as to how much it allows people to keep. So this Labor government thinks that, whenever it whacks on another tax on the unsuspecting Australian public, it saves some money for the government. It is a disgrace. Just to put it very squarely on the record, the coalition stands for lower taxes, the coalition stands for fairer and the coalition stands for simpler taxes. The coalition does not support this latest increase in the income tax rates applying to people across Australia.

In 2007 this government inherited a budget that was in very good shape: no government net debt, a $20 billion surplus, $60 billion’s worth of investment in the Future Fund—money put away for a rainy day—and what have we got now? We have had deficit after deficit. We have, as I mentioned, $40 billion’s worth of new and increased taxes and $94 billion’s worth of government net debt, yet still this government cannot find $1.8 billion to help fund the reconstruction effort in Queensland. This reconstruction effort is very important of course and is supported by the coalition. However, it should be able to be funded without having to go back to the Australian people in this ad hoc fashion, whacking yet another tax onto them.

The coalition has taken a very constructive and very bipartisan approach to this. We offered to sit down with the government and find the necessary savings. But that offer was not taken up. Whenever this government is faced with a challenge, whenever this government is faced with a problem, its first response—and instinct—is to go for another tax. This government never makes the tough decisions. This government does not do what is required to keep our public finances in healthy shape. If this government had its finances in order, there would be no need for this tax.

I will talk a little about the reconstruction effort. The Treasury tells us that current estimates are that the Commonwealth contribution to the reconstruction effort will be roughly $5.6 billion. That was an estimate identified before Cyclone Yasi, so chances are it is going to be quite a bit more. So we asked the government: ‘Given that chances are that your exposure is going to be quite a bit more than the $5.6 billion, what are you going to do if you do not have enough money? Are you going to whack on another tax? Are you going to increase it by more? Is the tax in these bills going to run for longer?’ ‘No,’ we were told, ‘there is no way we would do that.’ Of course, the Australian people know that they cannot trust this government when it says that there will not be another tax. ‘There will not be a carbon tax under the government I lead,’ the Prime Minister said. We know what happened to this. So we were a bit suspicious as to how credible these commitments were, but here we are—the government says: ‘No, no, we’re not going to increase this tax any further; we’re not going to make it run any longer. We’re just going to save some more money; we are going to cut some more spending in the budget.’

If you can cut some more spending down the track, if the expenditure will be more, why can you not do it now? In two months time we will have the budget; you can take a strategic approach to all of this. If you can make some more savings now why do you not do that now, and why not look at your revenue and spending commitments holistically in the budget in two months? The Commonwealth budget is $350 billion a year and you cannot find $2 billion out of $350 billion to help fund the necessary reconstruction effort in Queensland? This government is a joke. It is completely reckless when it comes to the management of public finances and that is the reason it nearly lost the election on 21 August last year and was only able to scrape back in with the support of two conservative Independents from New South Wales.

What sort of precedent has been set through this tax? Every time we have a natural disaster will the government come out and say, ‘Let’s have another tax’? We are going to have the bushfire tax and the flood tax and the—


Senator Parry interjecting—


Senator CORMANN —Yes, whatever tax you name, Senator Parry, you are quite right. The ingenuity and creativity of the government to come up with new taxes knows no end. Why did the government not wait until budget time? Why did they come up with this legislation now? Why did they announce it so quickly? It is because there is one thing that drives this government: the politics of getting away with introducing yet another tax.

This government is addicted to new taxes, but it also knows that taxes are unpopular. It knows that the Australian people have a lot of goodwill and generosity towards the people of Queensland and the reconstruction effort. This government thought that it would take advantage of that. This government thought it would strike while the iron is hot. This government thought there was no better time than the present to come up with a new tax: ‘This is the time to come up with the tax because people across Australia will let us get away with it. Let’s call it a flood levy. Let’s call it a mateship tax. Let’s give it a nice cuddly name and people will be happy about it.’ But, of course, the Australian people are not that stupid. They can see through this government. They have seen it again and again. When they were given supposedly high moral ground reasons to introduce another tax—Madam Acting Deputy President, you would well remember the alcopops tax, which was supposed to reduce binge drinking, which was supposed to reduce the consumption of alcopops at the same time that Treasury was counting on an increase in the consumption of alcopops. That is the sort of dishonest track record this government has when it comes to taxes: it sees an opportunity to get away with a new tax and goes through with it. That is what happens with this government.

The reality is that, in the face of tragedy, Australians had been donating generously. When Australians witness a tragedy like the one in Queensland, people are very generous and Australians have dug deep. But, after they have dug deep, in comes the government and whacks them with this tax. What do you think will happen when the next disaster comes around the corner, as it sadly but inevitably will? Do you think the Australian people will be a bit more circumspect, a bit more cautious, before they spend as much as they can possibly afford to support their fellow Australians in a time of need? Yes, because they will expect that this government will do as it has done before and whack them with yet another so-called emergency tax, a so-called mateship tax.

The government, supposedly, had made a whole series of savings, but, of course, hundreds of millions of dollars of those savings were reversed to get the vote of the Greens, Mr Wilkie and Senator Fielding. They have not yet got the vote of Senator Xenophon, as I understand it. They have been spending money left, right and centre, reversing savings and reversing spending cuts. Have the government identified any new, alternative spending cuts? No, they have not. So what did they say to us when we asked, ‘What’s going to happen?’ They said: ‘Wait for the budget. We’re going to organise all of that in the context of the budget.’ If you can organise those spending cuts in the context of the budget, why can you not organise the $1.8 billion worth of spending cuts that would be required in order not to have this tax as an ad hoc tax? Why would you not wait for the budget before proceeding with this? There has been no reasonable explanation for this from anyone in government.

Talking about strategic things, do you remember the Henry tax review, Madam Acting Deputy President? The Henry tax review was supposed to be this root and branch reform of our tax system, delivering a fairer and simpler tax system. The only thing we have ended up with out of that review is a multibillion-dollar new tax which was negotiated in private with three taxpayers, excluding all of their competitors from the process as well as the state and territory governments and all other stakeholders and the public at large. After the Prime Minister nearly lost the election but was saved by Mr Oakeshott and Mr Windsor, we were told that we were going to have a fair dinkum tax summit by 30 June 2011. We were told that, at that tax summit, the government would throw open all the recommendations of the Henry tax review and that there would be a strategic look at the taxation arrangements in this country, not this continuation of ad hoc tax grabs one after the other but a strategic look at what the taxation arrangements in the context of the spending commitments for Australia would need to be.

Is that going to happen? No. The promise very quickly made by the Prime Minister when she was desperate to get support to form a minority Labor government is about to be broken. The Treasury secretary, Ken Henry, let the cat out of the bag. I do not think he quite knew what he was doing when he quoted the Prime Minister as saying that it would not be happening before 30 June. But, of course, we have been hearing similar rumours. The Treasurer, Wayne Swan, does not want to have a strategic look at the tax system. He wants to continue to go ahead with tax grab, after tax grab, after tax grab, like this one, without being bothered by any strategic and serious reform assessment of the taxation needs of Australia. He does not want to be bothered by these sorts of strategic assessments in his pursuit of more and more money for this high-spending, wasteful Labor government.

So here we are with yet another Labor tax grab outside of any strategic context and which, in our judgment, is not in the public interest. In this context I would say to the member for Lyne and the member for New England that they have to realise that, unless they disassociate themselves from these sorts of Labor failures, these failures will also be their failures.

We had a debate in Senate estimates as to whether this was a tax. Senator Sherry was trying to argue this was not a tax. I refer Senator Sherry to the title of this bill which reads ‘income tax rates amendment bill’. What do you think an income tax rates amendment bill is going to do if it is not amending income tax rates? Let me be very clear on this for all Australian people: this is a bill to increase income tax for all Australians earning more than $50,000 unless they are in one of the few exemption areas. There is a lot of confusion about the exemption areas. We looked at the Prime Minister’s press release of 27 January as to who would be exempt. It said:

... anyone who received an Australian Government Disaster Recovery Payment for a flood event in 2010-11 will be exempt from the levy.

And a Treasury fact sheet said those who received an Australian Government Disaster Recovery Payment in relation to a flood event in 2011 would not have to pay the levy. So we asked this question in estimates: what about the victims of the WA bushfires? Don Randall, the very hardworking federal member for Canning, brought this to my attention. He said, ‘You’d better ask some questions about this in estimates,’ so I did. I asked the secretary of the finance department, and what did he say? He confirmed exactly that: only those who were subject to a flood event would not have to pay the levy. We thought that was a matter of public interest as a lot of constituents had approached us on this saying they were very concerned about it.

The West Australian were about to write a story on it so they presumably asked a question of the Prime Minister’s office. This is what the spokesman for Ms Gillard said, ‘Victims of this year’s WA bushfires will be exempted,’ and, ‘As the Prime Minister has made clear, if people have been hard hit by natural disasters in the last few weeks then it is only fair that they do not pay the levy.’ It is very nice for the Prime Minister’s spokesman to say that to a journalist when they are faced with what could be a bad story on the front page of a daily newspaper but to this day they have not actually adjusted the information on the Treasury website or in any of the official information. To this day the website still says that you are only going to be exempt if you were subject to a flood event.

Without wanting to be disrespectful, Prime Minister, we do not trust the word of your spokesman under pressure from a daily newspaper in Western Australia. We want to see that commitment in writing. If it is to be the case that all Australians subject to a natural disaster are going to be exempt, then you should be clarifying this today and you should be adjusting the information on your relevant websites today.

There have been too many broken promises by this Prime Minister for us to take at face value anything that she says particularly if that message is translated by one of her spin doctors in the context of a media story. I want to reflect on the approach taken to this tax by one of our colleagues in the lower house, namely the member for O’Connor. The member for O’Connor was elected on a platform to reverse the Canberra rip-off. It should now be clear to anyone that the people of O’Connor were deceived at the last election. Tony Crook is not here to reverse the rip-off; he is here helping Labor get rip-offs like this one through the parliament.


The ACTING DEPUTY PRESIDENT (Senator Moore)—Senator, I do not want to interrupt your flow but you need to refer to the member as Mr Crook.


Senator CORMANN —Mr Crook, the member for O’Connor, is not here to reverse the rip-off. He is helping Labor get rip-offs like this one through the parliament. Yet again the new member for O’Connor stood shoulder to shoulder with the Labor Prime Minister voting for, and not against, another Labor rip-off. Without the member for O’Connor, people across Australia, across Western Australia and across O’Connor would not be hit with this additional income tax grab. Without the member for O’Connor voting for it, this tax would have been defeated in the House of Representatives—and the people of O’Connor need to understand this very clearly. Wilson Tuckey would never have voted for a rip-off like this. He stood up for O’Connor and would never have voted for a Labor Party tax grab like this one. In fact, no Liberal member for O’Connor would have voted for this rip-off. So our message to the people of O’Connor is very clear: if you want to end Labor’s rip-off moving forward you need to vote for a change of government and the only way to achieve a change of government is to support your Liberal candidate for O’Connor at the next election.

I will conclude my remarks on this latest Labor Party tax grab. It is a tax grab by a desperate government that has been spending recklessly and has wasted taxpayers’ money. It has put our public finances in such bad shape that it feels it has been left with no choice other than to whack on yet another ad hoc tax. The time for ad hoc tax grabs should be over. We should be taking a strategic approach to our tax system. We as a parliament should be committed to lower, fairer and simpler taxes. Rather than come in with one tax grab after another outside of any strategic context, the Treasurer should commit himself to a fair dinkum tax summit. That was actually a very important achievement that the two key Independents got out of the negotiations with the government. I am disappointed that they are not working harder with us to ensure that this Labor government delivers on it. How many more ad hoc tax grabs will this government put forward between now and whenever this tax summit might finally happen some time in 2012? The Australian people deserve better. The Australian people deserve a government that does not whack on one new tax after another.